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Spotify is conducting a test of higher prices in markets like Scandinavia

2019 August 19

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Your Spotify subscription might get more expensive as the music-streaming leader tests a price increase for family plan subscribers in markets where it’s already a dominant force in music, like Scandinavia, to see whether it can raise prices in the region and around the world.

The current family plan that Spotify offers, which will soon let parents manage explicit content filters for kids’ accounts from their device, is a $15 per month value in the United States. However, that price point could potentially increase across all markets should Spotify decide to expand this test beyond Scandinavia. On the other hand, it is entirely possible that the higher prices might not be made permanent at all or at least might not roll out anywhere else.

Spotify will raise the price of its family plan by about thirteen percent, said the people who asked not to be identified because the increase hasn’t been announced. The test doesn’t mean Spotify will raise prices elsewhere or do so permanently in Scandinavia, they said. […] Spotify has also tested a plan called Premium Duo that offers two subscriptions for 12.49 euros ($13.91) a month.

Needless to say, the company declined to comment.

While this price hike could indeed boost revenue in markets where Spotify already has a strong presence, Netflix has learned the hard way that raising price for consumers may not be the best way to grow its user base globally in a customer-friendly manner.

Bloomberg has more:

Higher prices might help placate music companies, which have complained about falling revenue per user. They’ve previously questioned why Spotify doesn’t use its market-leading position to raise rates.

That’s because the service is still in a growth stage and has been relying heavily on discounts to keep customers and attract new ones. In fact, the Swedish company has experienced a significant decline in the average revenue per user over the last few years because of growing use of family plans and heavy discounts to draw in new customers and keep existing ones.

North America, Latin America and Europe account for more than 80 percent of Spotify’s customer base. The company is making a big push in Asia, where it has sold its service at low prices to compete with local players and free alternatives such as YouTube.

Contrasting Spotify’s 108 million paid customers, Apple Music had about 60 million paid accounts at midyear. Both services charge $15 per month for a family plan.

Aside from improved explicit content filters and parental controls for Spotify’s family accounts, the company also unveiled a new personalized “Family Mix” playlist, packed with songs “the whole family enjoys”. Apple and Spotify are apparently negotiating a truce that would permit Spotify users to control music directly via Siri.